De Beers enjoyed another year of growth in 2003, beating analysts’ expectations, posting sales of $5.52 billion – 7 percent above the previous year compared with a forecast of 5 percent, propelled by strong demand for rough diamonds from the cutting centers through out the year.

 

During a news conference this morning (Thursday), Managing Director, Gary Ralfe, reported the company raised rough prices three times during the year and by the end of the year, its prices were on average about 10 percent higher than at the beginning of the year.

 

The company says diamond jewelry sales during the first half of the year were marginally positive compared with the first half of 2002. However, strong growth in sales was reported in the third and fourth quarters as the world economy and consumer confidence rebounded.

 

Regarding De Beers LV, the joint venture with LVMH, Ralfe says he hopes the project will be a lucrative one, adding that the stores in Japan had a satisfactory Christmas but not yet a “triumph”. Plans for opening a NYC store still exist, but he does not know when it will be open.

 

Preliminary indications are that global retail sales of diamond jewelry for the year as a whole were about 5 percent higher than the previous year in local currency and, because of the weakness of the US Dollar, about 6 percent higher in US Dollars.

 

The USA, accounting for over 50 percent of world diamond jewelry sales, was particularly strong as were India, China and the UK. The company reports that Japan also recorded growth for the first time in a number of years. 

 

De Beers hopes this should “ensure that any excess pipeline stocks held by the trade would have been cleared by the 2003 year end and hopefully should help to reduce debt levels in the cutting centers which have been at historically high levels”.

 

The company overcame the significant appreciation of the Rand against the US Dollar in 2003 thanks to increased sales at higher prices and lower financing costs, resulting in headline earnings of $676 million, 17.6 percent higher than for 2002.

 

De Beers further reduced its diamond stocks by nearly $700 million during the year.

 

For the second year running, operating cash flow of $1.6 billion was generated, allowing the group to reduce net interest bearing debt from $1,716 million to $906 million and to reduce net gearing to 15 percent.

 

De Beers intends to pay a dividend of $400 million, of which an interim dividend of $250 million was paid in November and December.

 

During the conference Ralfe also reported three management changes. In July Jonathan Oppenheimer will become Managing Director of De Beers Consolidated Mines Limited and Gareth Penny of the DTC. They each succeed Ralfe who remains Managing Director of the De Beers Group and will report directly to him.

 

Peter Somner, as previously reported, is taking early retirement and stepping down from the Board, after 33 years of executive service to the DTC and four years as a Director of De Beers.